Abstract
In this paper, we investigate the influence of airport operation on property prices. In this research, we apply spatial hedonic regression and a difference-in-differences approach to address the introduction of new land use restrictions on property prices. We use data on housing transactions from two housing submarkets around regional airports in Poland. The results suggest that the introduction of land use restrictions impacts property prices. In general, as expected, more rigid restrictions translate into higher discounts in property prices. This research contributes to the limited knowledge on the impact of the introduction of land use restrictions on property prices, as most previous papers have focused solely on the impact of noise. These findings must be treated with caution, as some estimates were not statistically significant, mainly due to limited sample size. The research has important policy implications. Growing airports in Poland face tensions between economic and environmental sustainability. Currently, airports in Poland are obliged to limit their environmental impact by creating limited use areas related to the aircraft related noise while being responsible for property value loss related to these restrictions. As a consequence, most regional airports face significant compensations to property owners.
Highlights
Airport operation generates several externalities, some of which manifest on the property market—both negative and positive [1]
We examined the joint effect of both airport noise and land use restriction on property prices around selected regional airports in Poland
The research differs from many prior studies because we focused on the land use restrictions due to negative externalities generated by the airport operations not the relation between property prices and noise itself
Summary
Airport operation generates several externalities, some of which manifest on the property market—both negative (air pollution and noise, catastrophic risk, view disturbance) and positive (job availability, well-developed infrastructure, and public transit) [1]. The evidence shows there is a link between airports and urban development [2], airport operation can have detrimental consequences for neighbourhoods in proximity. One of the most profound negative externalities is noise pollution [3]. From an urban economic perspective, the net effect of airport proximity manifests in real estate prices. While some other types of land use limitations can decrease residential housing supply and drive up property prices, the final effects are strongly dependent on the demographic features of the possible buyers [4]
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